Do You Need a Financial Consultant or a CPA? Here’s How to Decide

When it comes to managing your finances, whether for personal or business purposes, you’ve likely encountered terms like financial consultant and CPA (Certified Public Accountant). Both professionals can help you make better financial decisions, but they serve different roles. The challenge is knowing when to hire each one and for what specific needs. In this blog, we’ll explore the differences between a financial consultant and a CPA, and how to determine which one is right for you.

What is a Financial Consultant?

A financial consultant, also known as a financial advisor or planner, is a professional who helps individuals and businesses make informed financial decisions. Financial consultants are experts in areas such as investment planning, retirement strategies, budgeting, debt management, and estate planning. They typically offer personalized advice to help you achieve your financial goals, whether it's growing your wealth, preparing for retirement, or managing your investments.

Some key roles of a financial consultant include:

Investment advice: Helping clients build diversified portfolios and select investments that align with their financial goals and risk tolerance.
Retirement planning: Creating strategies for saving and investing for retirement, including recommending specific retirement accounts and helping clients determine how much to save.
Tax-efficient strategies: Suggesting ways to minimize your tax liabilities through strategic investing, tax-deferred accounts, and other financial planning tools.
Estate planning: Providing advice on how to manage and transfer wealth in a tax-efficient manner after death, including trusts, wills, and other estate planning tools.

Financial consultants typically charge either a flat fee, hourly rate, or a percentage of assets under management. They are not necessarily licensed to prepare tax returns or offer legal advice, but they can work with a CPA or other specialists to provide comprehensive financial guidance.

What is a CPA?

A Certified Public Accountant (CPA), on the other hand, is a professional who specializes in accounting, tax preparation, and financial reporting. CPAs are licensed by state boards and are highly regulated, ensuring they adhere to strict standards of ethics and expertise. The primary role of a CPA is to help individuals and businesses manage their tax obligations efficiently, but they also provide services in auditing, financial statement preparation, and business consulting.

CPAs are experts in areas such as:

Tax preparation and planning: Helping clients file personal or business taxes and advising on ways to reduce tax liabilities, such as through deductions, credits, and other tax-saving strategies.
Financial reporting: Preparing and reviewing financial statements to ensure compliance with accounting standards.
Auditing: Conducting independent audits for businesses or non-profit organizations to ensure financial accuracy and transparency.
Business consulting: Offering advice on business formation, mergers, acquisitions, and other financial matters.

While a financial consultant can offer general advice on how to manage your money, a CPA’s expertise is centered around taxes and accounting. Many individuals and businesses need both a financial consultant and a CPA working together to maximize financial outcomes.

When to Hire a Financial Consultant?

A financial consultant is ideal when your focus is on long-term financial planning and wealth management. If you're looking to grow your investments, prepare for retirement, or create a solid financial strategy, a financial consultant can provide the expertise and strategies you need.

Here are some situations where a financial consultant can help:

Retirement planning: A financial consultant can help you set goals, calculate how much you need to save, and recommend specific investments that fit your risk profile and timeline.
Investment management: If you're looking to grow your wealth, a financial consultant will guide you on how to build a diversified portfolio tailored to your goals.
Estate planning: A consultant can help you structure your wealth in a way that minimizes taxes and ensures your assets are distributed according to your wishes.
Financial education: If you're new to personal finance or want to learn how to manage your money more effectively, a financial consultant can provide ongoing education and guidance.

When to Hire a CPA?

If your primary concern is taxes—whether it’s for personal or business purposes—a CPA should be your go-to professional. CPAs are specifically trained in tax laws and can provide valuable advice on how to manage your finances in the most tax-efficient manner.

Here are some reasons to hire a CPA:

Tax filing and compliance: A CPA will ensure that your tax returns are filed correctly and that you are in compliance with federal and state tax laws.
Tax-saving strategies: CPAs can help identify deductions and credits that reduce your tax liability, and they may suggest ways to structure your income or investments to reduce taxes in the long run.
Business taxes: If you own a business, a CPA can help with complex issues like payroll taxes, business deductions, and tax planning strategies for growth.
Audits and financial reviews: CPAs can also provide audit services for businesses, helping to identify potential errors or fraud in financial statements.

Can You Work with Both a Financial Consultant and a CPA?

In many cases, working with both a financial consultant and a CPA is a smart strategy. While the financial consultant focuses on growing your wealth and planning for the future, a CPA can help you minimize tax liabilities and ensure compliance with tax regulations. The collaboration between the two can result in a comprehensive, tax-efficient financial strategy.

For example, your financial consultant might recommend a retirement strategy or investment plan, while your CPA can offer advice on the most tax-efficient way to implement that plan.

How to Decide: Financial Consultant or CPA?

To decide whether you need a financial consultant or a CPA, think about your specific needs:

If you're seeking tax advice, filing assistance, or help with business taxes, a CPA is the right professional.
If you want help with wealth management, retirement planning, or investment strategies, a financial consultant is a better fit.

In many cases, both professionals work together to ensure your financial and tax strategies are aligned.

At Jones Advisory LLC, we understand the importance of making informed financial decisions. Whether you need a financial consultant to guide you toward achieving your financial goals or a CPA to ensure your tax filings are handled correctly, our experienced team is here to help.

Contact us today to schedule a consultation and learn how we can help you create a comprehensive financial strategy that fits your needs. Call us at (410) 321-0206 or visit jonesadvisoryllc.com to get started.